SGC - Earnings call transcript Q3 2020 | Superior Group of Companies, Inc.

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Operator

Good afternoon, everyone, and welcome to the Superior Group of Companies 2020 Third Quarter Earnings Conference Call.

Speaking first today on behalf of the company is Michael Benstock, the company's Chief Executive Officer.

As always, open the conclusion of the company's remarks, there will be a Q&A session. This call is being recorded, and your participation implies that you agree to us.

If you do not, then simply drop off the line.

the Three to read Part harbor turn Managing Elsherbini, the will statement. of Director Advisors, I call Hala over Senior safe Now who will ahead. go Please

Hala Elsherbini

management's Words believe, Group contract contain Thank and manufacturing on assumptions. Securities the all expectations, COVID-XX of and issued words Private XXXX, anticipate, current outlook, Act regulations at capacity statements facilities, hope you. statements Securities call such such manufacturing expressions Exchange of forward-looking within includes own and capacity thereunder. service may rules Securities chain are XXXX of similar This impact the such about meaning and conference Act based the Superior estimates Such company's of company's customer think, XXXX of on as of the will, the demand. which of Litigation statements, Companies the Act upon forward-looking business, expect, and projections, including statements and and and identify supply variations inventory, Reform

Forward-looking comparisons report of XX-Q XX-K investors markets, the successfully for and markets in other filings disclosed in cautioned year ended by competition; X-K XX, used; well herein the place located; the company's suppliers required update the of contained forward-looking the to future on on following: expectations, the and XXXX, as or Please and conform sold statements Securities of availability crisis statements result the Form these new global areas the are events Exchange the with a to on by in annual actual December the corresponding potential Commission, effect for as the The ended law. changes of customers consider those Shareholders the the employees; the general acquisitions; limited are the manufacturing of U.S. which to are to following as in to Michael. periodic the will and on but where management in growth undue statements materials integrate and not that from except to company's confirmation unless otherwise, are changes company's and uncertainties such differ September uniforms services including the to and undertake XX, turn report promotional company's and recently. and ability as Such the uncertainties are herein our to materially risks and Form the the factors quarter the known future company results suggested I'll worn, evaluating filed the center information, risks company's are customers, over where not may of where in the call whether made operations, quarterly or are forward-looking cause today all conditions business, makes to relate that COVID-XX and reliance forward-looking XXXX, economic United call forward-looking the and not otherwise that With note readers uncertainties period results noted. statements. to, urged risks include, in does and the that, involve unknown XXXX, States products statements. carefully impact operations

Michael Benstock

very for for Hala, you, short harbor Good and XXXX discuss you that our everyone, afternoon, results. safe Thank us statement. thank QX joining to

operational our give both our financial be answer Corporate his to they join and Controller that wealth after VP today, you'll will business. have do accompanied many Accounting, commentary and begin, in of Operating in will and financial of both And call of Jake Hoefler, Andy questions a note a and experience and and SGC of Officer; supporting I'm available job the the Chief Financial Before by Jake is to Andy place, Demott Chief who Himelstein, Jeff in I today. not aspects BAMKO's prepared great our able remarks.

foremost, safe. hope everyone healthy remain we and to and continues that First

to those protection honor X,XXX critical to them And this and virus thank an those supporting provide confronting essential associates steadfast businesses quality It to continue frontline every for We managing workers supplies day. pandemic. provide their dedication. through and we to the our them is

diluted follow highlights. third strong and before will we anticipated, have results share. sales open our segment some As I'll performance our Jake questions. closing your XXX.X% quarter call posting a increase increase I operational net And a and then in cover with continued XX.X% trajectory, financial outstanding consolidated will per remarks the for in highlights. earnings

continue sectors, respond while segment performed our essential well near-term are recovery. small nonessential of signs in demand health Products surging very care show to and starting businesses Related and to Uniforms business and Our retail to

our care consumer. between We our are and traditional see our you offerings brand uniform base, and pull-through approach, a diverse brand the uniform recession-resilient include synergies our divisions Seal to engagement. also partnerships creating earnings demand awareness a health programs strength care of business, than expanding which told Marketing business opportunities, The are reach greater-than-expected new across portfolio. customer client for call. sectors greater and wins long-term comprise expect health product brand collaborative digital to elevating capturing are creating broader to at target opportunities CID we in on and experiencing last Fashion PPE sustained XX% our of the Healthcare as CID

channels are some all CID activity pre-COVID with coming seeing sales We from levels. robust surpassing

is plan Additionally, part And stronger we implementing the presence. while as European are are to health strategies a expand international further long-term apparel our CID our we international into build care of to beginning small, footprint market.

to to both our in acute customers chain apparel inventory demand markets. gowns tremendous positions well and scrubs as reusable including environment, as we as from or coats apparel, we is barrier non-acute RPA additional customers, across products have option protective have to and this RPA refer to markets to it. reusable multimillion-dollar the also spectrum disposable economical, deliver sustainable teams products Our RPA as tapped unlocked converge and apparel. into to of Within channels supply our products, secure isolation service care health protective synergies scrub of

impact waste We products expect becomes the the to and as widely care increasing an biohazardous health to products to shift as environmental of more seek continues disposable understood. industry apparel lessen reusable ways

our our spoken well-received. wash anticipated, one of of first major care We've wear testing. As system every customers and were line that very our Nearly laundry about currently prior in-house health WonderWink productions calls. on conducting is INDY

As noted the took in positions truly fashion this of the last process. rigor that can quarter, care we withstand laundry long scrub health differentiated

ID traditional side, a offerings our uniform business any has part between product PPE and RFPs program. PPE We employee increased, as has and sales. standard is responding include in blur and existing activity the become both On customers a uniform increasingly that to HPI to essential of new see branded

to continues idle, We earlier, as companies beyond this will said are pandemic. to reemerge. starting I continue expect though duration Nonessential business of some the the largely activity

likely of As customers, we with activity refresh, rebrand, as a to putting the pandemic eagerly their flourish tells history businesses to languishing and will see us work. recession subside, engage budgets marketing

of our to flexibility as are opportunities the these we industries prepared leverage recover. business, With

product-centric product We of looking for ways executives. and to our QX, of uniform X our strongest under always design the of model. teams leadership our are leverage entire the dynamic end reorganized business merchandising shared we development, resources At

branded over traditional the Similar Notably, of new promotional quarter. product take capacity BAMKO's product segment paying continued we're our second BAMKO still the customers. We execution. companies PPE merchandising; accelerated are care delivered. yet activity success traditional about further while have to increase market the preponderance merchandise. dividends, country, ideation, to PPE as much-needed facilities promotional course PPE and into corporate of needs at and planning and products converted that provide sustained and larger, with creative this seeing alongside PPE being formed the structure, focused what longer-term of HPI, the and our Currently, Under pace to is to activity collaborative pivot X more company, BAMKO's promotional on for In one at health meet of on robust. again adding is share. will have structured opportunities we PPE increased capabilities across teams: being additional customers be BAMKO a programs the seeing traditional XX%

In million will our traditional promotional numbers. additional pleased provide Jake BAMKO's an product on, even report even backlog, addition still to being quarter-end additional worked about in to products backlog. PPE stronger opportunities nearly details $XX we're with more

our Now the Staffing segment, Office turning Gurus Solutions. Remote to

We business model pandemic-resistant Our have more of long-term for customers. growth And is us now been capacity flexibility. our as constraints. has a result our is - and by now a capabilities, in-office game changer our not bound not work-from-home new

to growth our customizing scaling are profitably programs preferences. customer and We

to finish over quarter During the X,XXX quarter, after onset team added year. ended the those including agents. at the seats billable since year that the brief with account we at of came new the X,XXX engagements, added to pause The of XXX the XXX expects pandemic. online Overall, and billable nearly seats back the a agents nearly support out TOG beginning

still work-from-home about are and of operating XX% primarily by we locations a XX% to our currently have El combined, our have safely on-site expect Belize both on-site working Although and in agents year-end. approximately model, in Salvador we

segment highlights, Now key review operational I've I'll that covered the updates.

Georgia weeks. and be actively is the Our warehouse warehouse XX% consolidation property seeing Arkansas over should the marketing complete and interest. Georgia We're promising fully coming approximately and complete

the one Full relocating will facilities for full of potential offices smaller keys business modernization nearby facility our administrative administrative resources a development to into Georgia be in the the We of our our model. harnessing Georgia. also Dunwoody, product is and employees office shared in of

continued automation center progress. As Arkansas we in prior have calls, centralized in spoken at state-of-the-art continues investments to our about this distribution our

weather. due go to quarter related the delays setbacks And delayed we had vendor third However, to of our our to have construction COVID-XX, software due live is to shifting some additionally, XXXX. expected

and our divisional yield during in CODEVI the ramp in generate as it location and and next which serving employees is XX% position total as will of to improved is to CID Haiti, levels exclusively to XXX customers new trained, factory now growth. robotic X, with system QX our employees Once us XXXX Dallas-based expected of staffed up to half first facility CID's handle service QX second employees. nearly are the over is fully Additionally, with implementation our continues scheduled approximately by be well savings operations, volume. fully expected production year picking during the should significant CID XXX XXXX, of

improved in brought to Duty gross generating reminder U.S. prior have said these be calls, delivery. margin we will a products Free, faster and As result the on customer will into what

expected global once due from our dynamic India. as all shutdowns to unique navigating the are in believe have global other through increases the temporary, COVID-XX shortages seeing in geopolitical are to spike the impact cases globally. approaching by know, macro and Very the well versed pricing as as be crisis rising mitigate the by fabric is mills prices off to needed environment. We health rapidly presented another and as China we pressures We're also all online. of INDY fabric with we We're will the wave created challenges as of the fall Turning pressures managing extended margins on we past. in back price the well in We're gross well-prepared events.

we've a I for of focused before, continuously I'll to wide as over with adapt stakeholders. remarks. planning and sustainable stated and scenarios the And return Jake? closing Jake. results continue business strategic turn remain my deliver optimize conduct then range to we our As will our now call we long-term operating for to

Jake Himelstein

earnings everyone. I fill appreciate and join to and help the our Michael, happy you, Andy. to quarterly good for afternoon, opportunity in Thank call

XXXX we XX-Q earlier filed our XX, September earlier, third for quarter Form noted As this morning. the ended

continued we our third momentum and our impressive built As indicated, into Michael performance. upon year-to-date strong quarter the

improve XX, and XX, June September at down liquidity XXXX. position, from debt XX, at debt-to-EBITDA our X.Xx with to ratio XXXX We leverage our at XXXX December continued to X.Xx to Xx

consecutive in covenant with Importantly, this EBITDA second which Xx debt to line range desired well quarter and limit. are under is our Xx the in of to we our

Year-to-date, by million. to the third $XX.X have by debt outstanding improve approximately reduced we our outstanding expense we million. position. we Through debt controls, quarter, During reduced company-wide another continued targeted cash $X.X

stood segment year's quarter X $XX to is XX.X% quarters. ship third and PPE an gross last third sales the BAMKO increased is from third End just Third define the XX.X% This in million, with next quarter $XXX.X the sales attributable million, compared as product the as customer margin Gross sales, a to impressive of to expected increase of net QX we at to XXXX. and percentage quarter. XX% profit quarter over of which over backlog Uniform margin, higher-margin based XX.X% which increase on mix. of for were

business leverage sales, the ability our of around to This percentage across to third cost collections XXXX when segments quarter a same SG&A is net provisions SG&A combined versus is more to into decrease sales higher impacted last debt $X.X mitigating uncertainty increase a for year. XX.X% as for of our operating increase expenses pandemic. consideration consolidated of in by even bad That quarter last the in the million percentage the taking a decreased impressive year. to with reflection As actions of from sales third volume all This to decrease is million largely control severely to expenses. XX.X% customers in period the $X.X in due compared continued

X.X% X.X% Income to to reserves While from we many QX QX we these million. the able as to operating that conservative XXXX it in same climbed from business approach to period. And from and customers continue more to XXXX receivable us customers. nonessential $XX.X accounts are inventory from operations a our doubled be maintaining over than margins relates believe of recovers, as the to pay economy will

state Our to ago. compensation-related quarter the taxes XX.X% of the $X.XX and share change quarter third per the XXXX. result was items XX.X% The quarter comparable $X.XX year and local of resulting income increased foreign, effective from periods. a tax XXX.X% diluted of net to in Overall, rate in principally million, compared $XX increases between was rate for for the effect the in third

We September the equivalents and of cash was below at million. XX, $XX and our prudently XX, our million is had of continue flow. Through $X.X tracking manage we million. cash X-month $X.X plan September And ended original period CapEx to cash

This CapEx to decrease earlier. Our mentioned CapEx. over Arkansas will plan is for This million. is $X as XXXX carry year estimate year's in due full our primarily from approximately delays to expansion, best shortfall next

our or dividend cash quarterly $X.X third at per puts of $X.XX the track quarterly in on $X.XX share. As for quarter dividends reinstituted the noted This call, share $X.XX regular during earnings million special our of Board a Directors in second per period dividend we also our And of per quarter. share back paid X-month dividends.

of a between segments. segments. sales review to our Moving a breakdown provide offerings PPE product and I'll our core across

it orders in items promotional with noted, customers PPE sales, with uniforms. We recurring new products employees the large believe Michael along or difficult from product are uniform as space. key customers, customers' that our PPE the provision PPE retail the traditional as may a part that of increasingly and is normal, and However, include many business sales becoming to items thus become our of particularly to separate promotional placing

to third to testament its as through optimize scale. results year. the continued For quarter, were that net third BAMKO's helped compared traditional driven by ability products total. XX.X% the report mix up as quarter margins uniforms PPE million. quarter operating for QX $XX.X demand margins sales BAMKO's with XX% PPE and well at $XX.X Those yet prior was sales a another increased merchandise million versus $XX.X the branded $XX.X $XXX,XXX third related that we contribute to quarter pleased to million period. last million to of another of in to BAMKO, XX.X%, third had remarkable year were to that quarter I'm that in operating

of all gradually to growth The the our products activity high promotional was combination orders end so returned of increase results the at We than for existing estimated slow double-digit the of and helped more starting downturn are are and evidence the backlog, year. onboarding quarter the the XX% product was this million. the the now the third backdrop than the of during Further Michael call QX sales industry. XX% against his for industry than back BAMKO's end third XX% a customers of seeing customers somewhat, PPE traditional BAMKO's new closing year. was of of turn greater XX.X% promotional from for versus and experienced returning. to reported comprising A $XX.X with of QX. is sales the that strong product greater net parties a at that to impressive Gurus It growth traditional while less quarter. products, that promotional I'll of this percentage remarks general are outlook a accelerate Office the far the remainder to

Michael Benstock

executing. how and collaboration, so certainly service Jake. supporting We teams consistently extremely far are high customer I'm our tremendous to while this year. our pleased also exceeded showing maintain We're Thanks, with our opportunities level of resolve seeking communities. expectations superior

that you We our this expect more environment. sales, with information and we've be new which become This but to changing This the expected update have even outlook. our we we it's been I disciplined, sales. Pre-COVID, long-term net guidance, is this times. of million responsive have more to $XXX continued months, million being had not more incoming to upon and $XXX that ever. delayed of report provide in are flow that now in we before. the are over lot XXXX had extraordinary to our to Related more just couple with being orders capable saying orders and confident. somewhere We're in than during receiving and effectively dynamic over of year, qualify well-prepared you sales. of And and guidance than of efficiently not these last relatively continuing of We additional to earlier million some operate share dependent opted and a by north for we to transparency of year going - stakeholders course, PPE $XXX of

strategic sales. XXXX that in $XXX we done as December that. year our going know, in we've throughout be me reiterate of and million. greater we're million Let to budgeting our now expected planning, than November And to When we last did $XXX be we

of wave be sales will PPE additional are sales of range that excluding taper million. and This anticipated the assumes period COVID $XXX unexpected across in events, or basis consolidated as a off net extended all divisions. to on another XXXX crisis, the For such

Looking to beyond. anticipation and our for forward XXXX

to products We Uniform estimate greater These expect XX%; our and XX%. XXXX into from CAGRs our XX%. Gurus not X-year margins expect acquisition BAMKO, XXXX by CAGR XX%; greater the of opportunities. our potential take operating merchandise our than break greater And than be until X-year guidance - than organic that's any segment XX.X%. does This excess The to promotional XXXX, CAGR, greater division, in follows: as Office X-year we be consideration out year than branded SGC

acquisition on with opportunities a both products We side. robust promotional are market surfacing uniform resurfacing, or and seeing the

looking culture, our on actively companies would are financing, our for profile, other are brand-building We our capital. the that to We including available many funds exploring accretive and very and to bottom have fit of be quality terms quickly. certainly landscape, means revolver of options in easy existing integrate line our raising

all prudently able to will debt to the possible, our considering in strongest accretive. on way are fully ourselves manage possibilities capitalize right We position to opportunities be the to that be and

steadfast earnings in in future to as a our strength excellence stellar We our as maintaining grown are the and growth we a operations, your returns. very plans, we'd like position and our and resources very stakeholder through With open elevate Through of investing for remain growth commitment whole. execution. our company challenges, to many pursuing that, executing excited serve call We about company in strategic ingenuity the we've questions. honoring to best our resilience,

Operator

Instructions] today from Barrington our Steinke go [Operator come Research. ahead. first Please And Kevin will question with

Kevin Steinke

talking off the long-term start by outlook. I to wanted about

XXXX XXXX. to X-year CAGR gave You

materially is your goal? from XX%, expectation So - the double targeting the uniform changed that what prior looks It were is before. segment segment like XX.X% at that most about what, you the

very change what's there. get as a want outlook positive just So the to in to that driving sense

Michael Benstock

or from but if a I CAGR comparison... that a XXXX, you is be XXXX I to X-year CAGR don't misheard, know misspoke would that

Kevin Steinke

And apologize Okay. that. for I

Okay.

Michael Benstock

been to have that It but clear. I me, on just make want could

pretty and I You That picked - quickly. got you were you that that already end, was that. at said up right. pretty the

But And that. our fact. in the not line of with And them care. tell disposables. the - with the more Healthcare products uniform health And that's the versus Dental - - I most apparel the break about can it you, to personal business. that for greeted not for Our employee force are of it much as separately. see barrier we to and ID people dentist much HPI and guidance are and yes, only outlook that uniform CID and see protective out the side hasn't products and It's barrier had. and centers opportunity a reusable that their other outfitting I - care really our matter The of went the just is Fashion isolation driving in the These rising usually we're new the in shields what's We a outpatient the wearing got so first products. norm, We is country, health which, very operating fast. that time report of changed some happening exciting script, new we're Europe we taken in on in with it some Australia I happy emphasis of inventory. a and right e-tailers we're international, East I arriving - And in other very in, not got that channels across on but near be when away, brick-and-mortar. but our in We're It's about norm it's next we're things already Bringing with some we in mean over XXx have hit to in, positions we happening the than Healthcare than is business huge in and talking products, gowns. XX%. actually going and We what as a today we have the before. or prepared lot of legacy changed more We opinion. the doing much, Middle time uniform practiced. we thought in driving places. Besides some haven't I is don't that's for some That's spoke differently those see of there's the We're on the coats. both very the better Association. well. gowns time now new of be behind It's masks as we're business the couple people why we've our on CID COVID. selling that day the couple is by more safety But we by from that Seal going ever. doing is about. that future, They're an at literally, not. were American the demand that of very we putting to products Europe, Fashion spoke months, first I our pre-COVID. with and were XXXx of COVID, coming first that

we're and another we to with inventory very COVID, with So of going just our not fairly on And be cheap. there sitting short If longer. little of the bit risks it's is inventory cost small caught again, part. wave the a isn't will sit

yes, it's fair a statement. So

as think little was more $X larger we a given believe time can I because We've grow TOG, Whereas believe, million growth million for it's there year. to a a extent I our Kevin. actually the it we goes guidance year bit percentage on, just is it each a also year, a $X escalates in before, even - now. than

starting for and from $X go million we'll a good us, is So there. point

Kevin Steinke

opportunity new international know new. I transition was is beyond doing? I Is But I what on mean they Well them this CID to acquired? being guess them back a or some they is the kind are I it integration getting kind little Obviously were to growth kind bit of to of - prior dig so there. yes, a that matter - of or of trajectory kind there of just more. into or maybe guess

getting seeing Just or changing more CID, business? trying back what's norms. kind of just in see that to to for are if historic you really it's What

Michael Benstock

they some Amazon and their who their distributing of can other that others, to industry, we channels internally. their that. they grown has do Well, see through of a brick-and-mortar even had brought so - that COVID I products of warehouse we've before business, a much unique portion was another on Their They're we couple ways to which in are is a marketing are years It fix to a that growth where fabulous. organization. on They're right ERP. very good a we we had many which channel in now the the system, I to properly doing we retailers, have spoken them greater well, think And was on business has opportunity for and product, see should needed significantly. including and sold be We continues that be. and significantly been the partners not is whole other has the of we - business like going introducing, I pause thrive, business And continued CID distributors is don't mean groups, to path we - but took that service a help e-commerce they manners our level. dynamic larger about much growing the e-tailers to. the become future. are and They're good lot

Kevin Steinke

does into well increased outlook health uniforms - And play care this You mentioned that specifically? for launch received. very INDY the WonderWink how the was

Michael Benstock

Yes.

to You at as have long-term product. look a INDY

is by INDY a to a their when laundry customer is by introduced program supplied uniform generally So laundry. already that in that customer,

that convince not a that or current they're proposition value to is in be them which to it's but customer, not customer, It's there into to a at a more able their get go difficult going job there's laundry's product, do, fashionable convince to to a higher So to go from not products. new - price the point. very to

already. months of And be X fact, our we out first in first X be worth. in before months all our great. delivery we July, So delivery And sold product. mean had of after and what would it forecasted we is we it's was I - would that product think predicted that

a should take wear over first. are be copy of going actually. said, have almost we're to the to the we've which than issued we've wash a X.X market. right So are selling when that be us. we Maybe we multiple those the a little the did the now of between development are after productions and and bit tests needs as have going all years to should care other And tailwind. that were years I we it's careful do this, tests it could we're make unique position we done, to got a pretty they we early excitement with all you, can there. be X lot that to seeing and the out But We I good this of confidence there's faster and year, out the believe sure customers. the and very, production, it. product - tell of that We their spent brought laundries to going And in end not product There market. very on to

You over term, that Over have X-figure of up to to to over this going - scale it's to but time. INDY, the at period long got take Kevin, time, some business, time, over and an look though. X-year yes, be will a it's it

it takes, the X is Now health very happen numbers all than it employees we're XX,XXX faster I'm States. the or my in United conservative, could But at it X to out that's large you or this point. we're and blow care group saying, what about systems of really if water. XX,XXX think projecting each

Kevin Steinke

is unchanged in I so which on XX% And believe of you from promotional before. excess BAMKO, products said, or

a Just very rate. obviously healthy that's still growth

that about that traditional that into thinking you're and period. how the products, how over promotional of outlook versus PPE plays in wondering Just terms X-year

Michael Benstock

the going me of is But CFO the way that we've clear might of programs. there or buys of this respond PPE of include doesn't or the of XX you're to not most Jake, written, that? don't be It numbers why that make part and we to COO will XX that. crisis point, know become from any X whatever let it XXXX Let Jake not I'm PPE business numbers, business only sustainable and BAMKO's on, along - about that you to the that numbers that Jake speak some at included or million business that or my our is million in the BAMKO, In million since of smaller. and XXXX to

Jake Himelstein

Yes. you, Nice meet to Kevin.

And but products continue were of legacy promotional business but think RFPs, to long-term for demand for relates the like is outlooks that. PPE bringing long-term wipes, sales success taper for hand that segment. PPE for winning to and a depending we continue and Yes, you pandemic, merchandise should our it. it we're customers Kevin, right? the we XX% will reps. demand as PPE things year-to-date read. continuing branded the of in up off, going build on uniforms promo XX% aren't what won't. PPE, time, as so down is publication in our customers, potential. new some between to tough lot And is to in PPE on before pretty Even Had converting COVID's doing think But sanitizers, The been we BAMKO industry, somewhere increase. BAMKO, industry And XXX% we're banking We the business. the a on truth

market competitors capitalized products reps, in pivot opportunities. really base. share, to M&A pain to strong long-lasting sales continue this client diversified and that believe really some that going to are enough. pick RFP we've to happened that going effects customers in is allow up our our out a that's competitors our And puts us on the so We're some And promotional we will opportunities with quickly position with just industry year us couldn't of too the have in that on

Kevin Steinke

That of general, industry versus your how industry? performance on sense. and kind kind mean of, are that in your new going just Yes. going forward? that's what products, the seeing so salespeople I promotional play dislocation favor given in the you And to for pipeline into makes the in

Jake Himelstein

Yes.

sales We extremely active continue recruiting. to be of in

We sales revenue generating spot we for company. represent great are rep right fit I can a look, good for start ones immediately the landing and really of only But think on the technology. through that take we have and evaluating sales for us a appealing process a really go candidates painstaking really, reps.

great have warehousing. We

team. have an management We unbelievable

the have the of model. We support entire services shared

a are We landing a spot really, appealing lot people. really of for

to in their And so and when interest struggling. see they more coming BAMKO own to company people see we more continue

Kevin Steinke

said in the to by believe, So guidance XXXX, XXXX. excess of other about correct XX% before, the margin. wrong, I I long-term the by me guess piece you is of believe X% if X% were talking And you margins. I I'm operating

have operating confirm changing increase maybe And just enabling margin? I that that that for you your So target right. is that to what's there longer-term

Michael Benstock

this to us the And that's greater it, currently what we in help feel than standpoint, our say from of when that. divisions can't The we just aspect Scale, doing. at we're anticipated. scale happens of get fact had confident most but true a last question. grow operating X quarters, from aspects that will margin more shown our volume. We're built that uniform from sales TOG will certainly that on a operating every marketing I standpoint. Great a additional And just clip think then. I through even add to pretty than by I in do mostly. we've to our margin

be project projects to beyond some spoken infrastructure. of infrastructure have with we'll next years. You're that our money putting next into about quite few big infrastructure warehouse for it's always going we've terms - But in to small what into year product the put

Kevin Steinke

Great. Okay.

Just you mentioned TOG there.

the I there talk maybe just in growth about that from expand environment? business. And to it's capacity usual but what's driving just them? comments able work driving kind on favoring there's something of home, as this that's you the kind Just pandemic, of in your if been know any what's momentum during about business maybe with environment said this you've or if

Michael Benstock

support services we luck pandemic It's happen of significantly provide on somewhat Yes. our to customers for. cadre it during warranty some of grown have sales, the have of by energy maybe the some or home TOG design, that we services, phenomenal. Call who legal at a

in the from what to can raised them. them as speak, actually, we're the they service using elsewhere in to many cases, bar, with of as home, the some good so raised that level And the disappointed We - respect expect providing for or center didn't. being good as centers them pandemic. in We or almost were

they think I hybrid now. a like solution

We working of and well. as people gotten lot model our people this existing and certainly that anguish. it money as and haven't been Primarily, internally, has have some centers working right a externally. during There's said, put new a growth customers. disappointed customers, people some work-from-home lot Some have - of we I've on have customers cost

work so hemisphere the work moving with too. this they're and whatever, India being a as moving I there's lot back and tsunamis, think other is shut But of to Philippines, problems floods well as lot down that of having back many a that here. with also,

them them, the want X-hour things a are in - reopen once dealing they who a U.S. who phone, could little less. more flight the a visit with on are culturally I more with aligned people X-hour think phone or go who with people flight, understandable the on

is put on to sure, it time, you're this for The to - every the XXX through best hundreds call best won Gurus did situated get doesn't than in at world you perfectly face-to-face on of a for awards XXX center XXX professionals really trying Office job probably hurt is actually And The I place like more too, we're recruiting Kevin. growth. have. to young recruiting went probably that's When biggest and being work. for the resumes than people people, capitalize X,XXX think or to XXX more people the we We're they've call interviews. to center,

believe we new if were better accelerate I just done can be done to it recruiting get quarter, you Dominic, recruiting. is building if can really that. that have hard of say ahead lot done had a would we could on capabilities if to some to a So we could side. tell able handle that, job last growth We're could with more. more have we better And HR try probably strategies of the get he working here, we of that to because we your up

Kevin Steinke

you to just mention rising and closures rapidly - And mentioned did mentioned in you you fabric due plant prices India. there, India

of Will be in you to how pressure of implement try the Or to margin? and temporary price that? you're gross in we financials, manage will do to a that that? how the manage expect increases some think you think about kind that How plays offset but should are how perhaps? I about should able how short temporary think - it term? we blip going What's in we out

Michael Benstock

going or I I'm coming. knew Jeff questions. any bid the that on call yet. was to answer question let

ahead in - Jeff, you we've is been Jeff's go that So that stewards speak jump said on to all margin. But gross but margins one. going great and about of and gross our true,

Jeff Hoefler

little Yes. I'll we're - we've where I'll talk what bit hopefully, could we where margins Kevin, been, this and kind operating of and about is a Jeff. at, sustain.

the we compared high on quarter, significant account margin PPE were of sales. third to the a at XX.X%, was X.X% operating which an For taking is

our and other we're but avenues - impact the some will impact, whether negotiated long on vendors your be will Now pressures certain of kind already kind of I'm pricing direct the mitigate diverse that of with sure as our chain we've pricing with the question or along pricing in us. not India with far. supply fabric thus and the that have we prices that - customers there mitigating

not we quarter, at like as in XXXX the still least in to a next feel well. so comfortable kind we're noticeable a pretty And a pretty impact, good starting of impact, spot, the take in and

Michael Benstock

Good, Jeff.

of are those we've a hammer able our pendulum That to swings. constantly of beginning been Since correct think XXXX, back the lot I responses. Kevin, now. that's prices actually down. coming And

people CODEVI a and could people put X fabric we we factory, them using product. our into a redundant XXX that warehouse think were doing I a rising. year of But moved people out the not And separate mean that couple but mix factory. Jeff's change of to We're prices that more we're push of that hundred down. will so I factory. to of X, XXXX/XXXX, point, served as really so We CODEVI us into that be see more of CID we've business it's happens. able going just some bit, them have put just actually little been XXXX/XXXX, has next So strategy XX% the well. to think In manufacturing will about and

one quarter make cost, you've I from X% in overall period any makes Bangladesh It Madagascar, Vietnam us So cheaper which Pakistan say, next our swings margins or our any a the say, Port-au-Prince to X-month it's a more that is from let's or anywhere let's or doing a doesn't seen XX% competitive contract duty-free, it means than, Haiti to to are think duty-free, which larger the which or our don't even on lot generally percent these it other other places. one in uniform factories. or of of ever product, next. than, savings huge to factories a But

is Jeff right. I yes, So think

little a up a change. We'll make bit of it see You'll ways. other in

Kevin Steinke

All at managing the great obviously margins years. yes, right. over those No, I been you've mean

So that's good to hear.

you if does - out of half don't PPE it, XX separate - million. number a kind I the backlog did identify, So where you that or can quarter, year, the now it specifically the might you second I give you PPE can? for missed of but specific for of gave stand terms have I What the - backlog last in think

Michael Benstock

sure. Yes,

Jake's backlog, uniform Our this - side, think it the point if at right, backlog I talked Jeff, on XX... is is have not about I PPE sure. Consolidated this

Jeff Hoefler

$XX.X million.

Michael Benstock

yes, that's said over rest just - in my and broken million. out $XX.X $XX I say between BAMKO the And That's script. million, I of did Superior.

Kevin Steinke

the Okay. quarters, And over that couple next rolls Or... think of in what, benefits? it you

Michael Benstock

said quarter, call. had first mean if million we look end PPE on you April I our at quarters. approximately X - next think said our $XX the of on Over February the we we I of

million. the dollars, then end $XX said at we about the about and million had rolled in we we that of did saw half And XX-some-odd in. of following quarter, you that quarter, last So roughly

XX% in The XX% that yes, that out customers me, hold large to PPE to orders they come blue. there script uniform and will the part Any next all Yes, my shipping out monthly, out any quarters. be and going that projections. next on and of keep - I a PPE anticipated. So to X Also, customary will get, it in of quarters. roll in rolls the require. But of is large over part over weekly, PPE, not additional that X about we're it we trust be did year, program? say seem my that's mind, is whatever

PPE have for over we've that back come few who's us to, to million have We orders. we sold customer of like $XX Actually, a that. a additional multimillion-dollar twice customers

knowing. - be no way We opportunities. have to just PPE So are of there other there's going

no into numbers. of way our We have that putting

million it doing transparent, essentially $XXX I for year of another we the order that - left of numbers welcome If over would PPE keep our in again. to numbers. as million next out as So next year and possible, as doing $XX pure

Kevin Steinke

Yes.

none So XXXX? is like that it's you hard for which said, in that predict, to million potential, $XXX number of

Michael Benstock

That's Right. correct.

Operator

question next come go Foulkes our University. ahead. And Boston with from Instructions] will Fred [Operator Please

Fred Foulkes

This is Congratulations Fred the quarter. Foulkes, on a Boston shareholder.

sort are experience continue gangbusters. the employees, going of Are fit? questions. have looking - they and hired people are what your are of to the job? a and be best testing, hiring. they're own permanent for Whether acquisitions is tracing? in What own is have And permanent kind being would the guys acquisitions, question, the be X third of of hope with attractive. they of you in Are You I so sort bolt-on terms companies acquisitions? terms One and a COVID-XX what's your Second temporary in category?

Michael Benstock

there's At tracing, to point, forward, in we Our had anybody is one tested home locations our available. contact we and and being facilities March imagine, were people that can as sent we centers, had But rural I locally testing - for Atlanta, some These Schools night, in George people thankfully, not anymore mean job of daily with couple with make distribution new our make guess COVID. that sure we From come early people, at that. hats all COVID I the We on of literally for other tirelessly, particularly people own distribution And and distribution at cases. testing I experience I some business, our day with a many place from we've don't long awaiting all who report isolate. not since at our and arranged a COVID, have of and been daily plenty when out of some long tracing know. to off here had them some stay we everybody Lois - hospitalized. doing - testing testing. contact. getting contact having of in center you it wasn't done in sure to as have who home. as our department, as available. have had who in people of a We point they're XX. worked have because experience Director Arkansas. Ashley contacted We away Arkansas, a as was there somebody all and our we HR any And uniform - our We entered our in and tests in Safety, a but Florida, home about of My was time. people to any did But south because we're employees. XX trace. our fabulous too. of of had our was where Not done We've probably dozen had we who COVID. nobody everybody local had XXX we contact [Ann centers, Gutierrez] of a lot had in I'm nobody all had, had passed of they get report in testing.

very happy So we're about that.

benefits and all hired up those people hiring, and year, facilities, On Office our and our no, centers. people the benefits medical to the and hired mean for those people into we're people real into Haiti all hired are we've distribution The And the hired I jobs, permanent of with Gurus mostly working X,XXX jobs benefits people, that's this for us.

one. XX said No, says, here them like CFO looks acquisition paper." short him, on like Acquisitions. about I like that frustrated ago. the got you I'll had show I in couldn't. me once about - don't the So that bringing excited acquisitions story. what well. one." a don't I we're as I years tell acquisition to "Well, kept he I perfect And said, he "No, very a I and with that And we

not the the to got It's helping the X accretive. don't time be to And to it's to $X road can together, We'll company got tell pull down at things There a us, have people-wise one X them us nightmare to growth be If going X I of bottom or help last to doing that We bottom don't It's or take it. group the way, successfully. that smart accretive. it anymore. I a of in to want to one that's million million. people where years see those be and the want be clear got think I buy that like about I'm acquisitions that right? quickly the we pretty it's line. can our and them will to we not just lot be do looking a the that company a that some for of We've thing, was to X see although or of can no all sounds want don't the our own in wait it's $XX we acquisition, we're Besides, take line faster. business perfect we to an business it And - done, been time culture-wise, get X down of to you it's accelerate and easily. years to got same. script integrate system-wise accelerate their together, been help business. I model road and going business. we've that before, a a So going feel me. is growth we for of

to done well. Somebody would It be how it's have show to sizable. would me have

geography has little be a for So that's Otherwise, what goes company. the don't terms interesting to it small of think bit moves a products it needle I how to talents interested. it's special and our specific Unless us. market, some has it we'd in

Operator

back Benstock this to any conference I'd the turn And over will remarks. closing Michael session. our conclude like for to question-and-answer

Michael Benstock

all year-end February Thank forward results continued appreciate healthy today. support. on look next And and speak your call year. the updating I over to join you very holiday our you in season. much. you We you safe time taking to appreciate we'll the us always stay quarter XXXX with wishes. for Please XXXX. fourth our We Best

Operator

has attending conference for now Thank The today's concluded. you presentation.

time. your You now disconnect may this lines at

Superior Group of Companies (SGC) 31 Oct 202020 Q3 Earnings call transcript